SF1449_Exhibit_1_-_Bunker_Adjustment_Factor_(BAF).pdf

Exhibit 1- Page 1 of 7

20 August 2015

1. Bunker Adjustment Factor (BAF)

1.1. Allowance

An allowance for fluctuations in marine fuel prices shall be paid to the Contractors or to the US Government in accordance with the following:

a. The allowance shall be paid per freight payable unit of cargo. For containerized goods these units are 20-foot and 40-foot containers. For breakbulk cargo, they are measurement tons.

b. The BAF is zero unless the one-month average fuel price is at least 20% higher or 20% lower than the baseline average fuel price. No bunker adjustment is payable on the routes not included in BAF Table 1 below.

c. The compensation per freight payable unit shall be calculated as follows:

[(Monthly Avg fuel price of MGO x lane specific percentage + Monthly Avg fuel price IFO 380 x lane specific percentage – annual baseline fuel price) x BAF Technical Factor] / 6.50 (Conversion factor, metric tons to barrels)

1.2. Baseline Fuel Price

The baseline fuel price shall be re-priced annually prior to contract award and the award of each option year if exercised. The baseline fuel prices shall be based on the average fuel price over a three month time frame for Norfolk and Los Angeles. The three month period will be based on the three months prior to the month the Request for Proposal is issued. In the case of the Option Periods, the three month period will be based on the three months prior to the month that CARE II is available to the Carriers to input rates.

1.3 Fuel Mixture

The bunker fuel mixture for each lane is shown below in BAF Table 1.

BAF Table 1

Lane Name

High Sulfur Bunker Share

ECA Share (Low Sulfur)

01 U.S. West Coast - Far East 84% 16%

Continental Europe, United Kingdom, Ireland - Middle East, South Asia, Indian Ocean 85% 15%

03 U.S. West Coast – Hawaii 53% 47%

04 Middle East, South Asia, Indian Ocean Interport 95% 5%

05 U.S. East Coast - Continental Europe, United Kingdom, Ireland 36% 64%

06 U.S. East Coast – Mediterranean 71% 29%

07 U.S. East Coast - Middle East, South Asia, Indian Ocean 80% 20%

08 U.S. East Coast - Far East 87% 13%

09 U.S. East Coast – Hawaii 74% 26%

10 U.S. Gulf Coast - Scandinavia, Baltic Sea 37% 63%

11 U.S. Gulf Coast - Continental Europe, United Kingdom, Ireland 61% 39%

Exhibit 1- Page 2 of 7

12 U.S. Gulf Coast – Mediterranean 79% 21%

13 U.S. Gulf Coast - Middle East, South Asia, Indian Ocean 86% 14%

14 U.S. Gulf Coast - Far East 89% 11%

15 U.S. Gulf Coast - Hawaii 75% 25%

16 Hawaii - Far East 84% 16%

U.S. Great Lakes - Continental Europe, United Kingdom, Ireland 35% 65%

18 Caribbean Interport 95% 5%

19 Far East Interport 95% 5%

20 Mediterranean Interport 95% 5%

21 Canada East Coast - Mediterranean 84% 16%

Canada East Coast - Continental Europe, United Kingdom, Ireland 74% 26%

23 U.S. West Coast - Continental Europe, United Kingdom, Ireland 74% 26%

Scandinavia, Baltic - Continental Europe, United Kingdom, Ireland 0% 100%

25 U.S. West Coast - Mediterranean 91% 9%

26 U.S. West Coast - Alaska 0% 100%

27 Hawaii - Continental Europe, United Kingdom, Ireland 84% 16%

28 U.S. West Coast - Central America/Mexico 84% 16%

29 Alaska Interport 87% 13%

30 U.S. East Coast - Greenland 29% 71%

31 U.S. East Coast - Iceland 39% 61%

32 U.S. East Coast - Scandinavia, Baltic Sea 31% 69%

33 U.S. East Coast - Azores 77% 23%

34 Continental Europe, United Kingdom, Ireland - Mediterranean 78% 22%

35 (Reserved)

36 Mediterranean - Hawaii 91% 9%

37 U.S. East Coast - Caribbean 75% 25%

38 (Reserved)

39 U.S. East Coast - Central America/Mexico 67% 33%

40 Africa Interport 95% 5%

41 (Reserved)

42 U.S. Gulf Coast - Caribbean 63% 37%

43 U.S. Gulf Coast - Central America/Mexico 63% 37%

44 (Reserved)

45 U.S. Great Lakes - Far East 81% 19%

46 U.S. Great Lakes - Mediterranean 62% 38%

Exhibit 1- Page 3 of 7

47 U.S. West Coast - Middle East, South Asia, Indian Ocean 81% 19%

48 Continental Europe, United Kingdom, Ireland Interport 0% 100%

49 Far East - Continental Europe, United Kingdom, Ireland 89% 11%

50 Far East - Mediterranean 95% 5%

51 Far East - Middle East, South Asia, Indian Ocean 95% 5%

52 U.S. East Coast - Black Sea 66% 34%

53 U.S. West Coast - South America 93% 7%

54 U.S. West Coast - Oceania 88% 12%

55 U.S. East Coast - South America 67% 33%

56 U.S. Gulf Coast - South America 71% 29%

57 Mediterranean - Middle East, South Asia, Indian Ocean 95% 5%

58 Far East – South America 85% 15%

59 (Reserved)

60 U.S. East Coast - Africa 80% 20%

61 Far East - Oceania 95% 5%

62 Continental Europe, United Kingdom, Ireland - Iceland 46% 54%

63 Iceland - Mediterranean 95% 5%

64 Continental Europe - Azores 56% 44%

Central America/Mexico - Continental Europe, United Kingdom, Ireland 81% 19%

66 Central America/Mexico - Mediterranean 95% 5%

67 U.S. West Coast - Africa 88% 12%

68 Central America/Mexico - South America 95% 5%

69 Central America/Mexico - Oceania 95% 5%

70 Azores - Mediterranean 95% 5%

71 Continental Europe, United Kingdom, Ireland - Africa 85% 15%

72 Continental Europe, United Kingdom, Ireland - Oceania 90% 10%

73 U.S. Gulf Coast - Africa 85% 15%

74 Mediterranean - Africa 95% 5%

75 Africa - Middle East, South Asia, Indian Ocean 95% 5%

76 Central America/Mexico Interport 95% 5%

77 U.S. East Coast - Oceania 87% 13%

78 U.S. Gulf Coast - Oceania 92% 8%

79 Hawaii - Oceania 89% 11%

80 Oceania - Middle East, South Asia, Indian Ocean 95% 5%

81 Oceania Interport 95% 5%

82 Alaska - Far East 91% 9%

Exhibit 1- Page 4 of 7

83 Alaska - Oceania 92% 8%

84 Caribbean - Central America, Mexico 95% 5%

85 Hawaii - Middle East, South Asia, Indian Ocean 92% 8%

86 Mediterranean - Scandinavia, Baltic Sea 66% 34%

87 Far East - Scandinavia 84% 16%

88 Continental Europe, United Kingdom, Ireland - Caribbean 80% 20%

89 Mediterranean - Oceania 95% 5%

90 Far East - Africa 95% 5%

91 Alaska - Middle East, South Asia, Indian Ocean 93% 7%

92 Caribbean - Middle East, South Asia, Indian Ocean 95% 5%

93 Far East – Central America/Mexico 95% 5%

96 Black Sea Interport 0% 100%

98 Baltic Interport 95% 5%

99 Caribbean - Africa 95% 5%

1.4. Calculations

1.4.1. BAF shall be calculated using an average of Norfolk and Los Angeles prices.

1.4.2. An average fuel price shall be computed by SDDC for Los Angeles and Norfolk. This average price shall be calculated on or after the first of the month for the prior month and shall apply to shipments booked for sailings in the next month. The monthly computation of adjusted average fuel prices will be posted to the SDDC website no later than the 15th of the month prior to the month in which it will be applied. Example: The average fuel prices for calculation of BAF charges for March shall be based on bunker prices for the month of January.

1.4.3. The scheduled month the vessel departs the load port at the time of booking shall determine the month for calculation of BAF charges.

1.4.4. The source for bunker prices is Bunkerworld (http://www.bunkerworld.com/), which calculates bunker average monthly prices by port and fuel type. These prices are quoted in metric tons. The IFO 380, Ultra Low Sulfur, and MGO average quotes shall then be averaged to calculate the monthly average fuel prices for Norfolk and Los Angeles.

1.4.5. SDDC shall monitor, calculate, and post BAF to the SDDC website.

1.5. Payment procedures.

Contractors are responsible for indicating on their shipment invoice whether a fuel payment is due them, whether no fuel payment is to be made, or whether a fuel payment is due SDDC. If a fuel payment is due the Contractor or SDDC, the Contractor shall compute the value of the payment (or credit) and indicate this

Exhibit 1- Page 5 of 7 on the shipment invoice. If there is no fuel payment, the Contractor shall indicate on the invoice “No Fuel Adjustment”. BAF for authorized agent shipments shall be paid using this process.

1.6. Application

The bunker fuel adjustment applies to fuel purchased by the Contractor from normal commercial suppliers and does not apply when bunker fuel has been provided or subsidized by the U.S. Government or foreign Governments.

1.7. Technical Factors and Freight Payable Units

The technical factors and their freight payable units are shown in BAF Table 2 below:

BAF Table 2

Technical Factors

Lane Lane Description TEU FEU1 MT 01 U.S. West Coast - Far East 0.246 0.458 0.0113

Continental Europe, United Kingdom, Ireland - Middle East, South Asia, Indian Ocean 0.320 0.596 0.0159

03 U.S. West Coast - Hawaii 0.135 0.252 0.0054 04 Middle East, South Asia, Indian Ocean Interport 0.052 0.097 0.0025 05 U.S. East Coast - Continental Europe, United Kingdom, Ireland 0.179 0.334 0.0078 06 U.S. East Coast - Mediterranean 0.229 0.426 0.0118 07 U.S. East Coast - Middle East, South Asia, Indian Ocean 0.385 0.717 0.0189 08 U.S. East Coast - Far East 0.602 1.119 0.0302 09 U.S. East Coast - Hawaii 0.307 0.572 0.0127 10 U.S. Gulf Coast - Scandinavia, Baltic Sea 0.238 0.443 0.0115 11 U.S. Gulf Coast - Continental Europe, United Kingdom, Ireland 0.215 0.400 0.0108 12 U.S. Gulf Coast - Mediterranean 0.276 0.513 0.0143 13 U.S. Gulf Coast - Middle East, South Asia, Indian Ocean 0.409 0.761 0.0209 14 U.S. Gulf Coast - Far East 0.502 0.933 0.0301 15 U.S. Gulf Coast - Hawaii 0.287 0.534 0.0169 16 Hawaii - Far East 0.250 0.466 0.0111 17 U.S. Great Lakes - Continental Europe, United Kingdom, Ireland 0.165 0.307 0.0085 18 Caribbean Interport 0.017 0.031 0.0004 19 Far East Interport 0.135 0.251 0.0076 20 Mediterranean Interport 0.083 0.154 0.0044 21 Canada East Coast - Mediterranean 0.226 0.420 0.0087 22 Canada East Coast - Continental Europe, United Kingdom, Ireland 0.132 0.245 0.0051 23 U.S. West Coast - Continental Europe, United Kingdom, Ireland 0.389 0.724 0.0179

Scandinavia, Baltic Sea - Continental Europe, United Kingdom, Ireland 0.063 0.118 0.0028

25 U.S. West Coast - Mediterranean 0.354 0.659 0.0184 26 U.S. West Coast - Alaska 0.125 0.233 0.0030 27 Hawaii - Continental Europe, United Kingdom, Ireland 0.412 0.767 0.0204 28 U.S. West Coast - Central America/Mexico 0.167 0.310 0.0067 29 Alaska Interport 0.113 0.209 0.0035 30 U.S. East Coast - Greenland 0.131 0.244 0.0055

Exhibit 1- Page 6 of 7

31 U.S. East Coast - Iceland 0.123 0.230 0.0057 32 U.S. East Coast - Scandinavia, Baltic Sea 0.192 0.358 0.0087 33 U.S. East Coast - Azores 0.096 0.178 0.0060 34 Continental Europe, United Kingdom, Ireland - Mediterranean 0.168 0.313 0.0081 35 (Reserved) 36 Mediterranean - Hawaii 0.427 0.794 0.0261 37 U.S. East Coast - Caribbean 0.075 0.139 0.0014 38 (Reserved) 39 U.S. East Coast - Central America/Mexico 0.122 0.227 0.0104 40 (Reserved) 0.097 0.181 0.0044 41 (Reserved) 42 U.S. Gulf Coast - Caribbean 0.105 0.195 0.0054 43 U.S. Gulf Coast - Central America/Mexico 0.084 0.157 0.0085 44 (Reserved) 45 U.S. Great Lakes - Far East 0.640 1.190 0.0247 46 U.S. Great Lakes - Mediterranean 0.303 0.563 0.0106 47 U.S. West Coast - Middle East, South Asia, Indian Ocean 0.502 0.934 0.0196 48 Continental Europe - United Kingdom, Ireland Interport 0.024 0.044 0.0010 49 Far East - Continental Europe, United Kingdom, Ireland 0.496 0.923 0.0218 50 Far East - Mediterranean 0.444 0.827 0.0246 51 Far East - Middle East, South Asia, Indian Ocean 0.312 0.580 0.0168 52 U.S. East Coast - Black Sea 0.289 0.538 0.0138 53 U.S. West Coast - South America 0.159 0.296 0.0073 54 U.S. West Coast - Oceania 0.355 0.661 0.0093 55 U.S. East Coast - South America 0.092 0.170 0.0097 56 U.S. Gulf Coast - South America 0.117 0.218 0.0107 57 Mediterranean - Middle East, South Asia, Indian Ocean 0.215 0.400 0.0113 58 Far East - South America 0.035 0.065 0.0023 59 (Reserved) 60 U.S. East Coast - Africa 0.305 0.566 0.0153 61 Far East - Oceania 0.370 0.689 0.0169 62 Continental Europe, United Kingdom, Ireland - Iceland 0.089 0.165 0.0029 63 Iceland - Mediterranean 0.125 0.232 0.0048 64 Continental Europe - Azores 0.076 0.142 0.0036

Central America/Mexico - Continental Europe, United Kingdom, Ireland 0.221 0.411 0.0096

66 Central America/Mexico - Mediterranean 0.225 0.418 0.0102 67 U.S. West Coast - Africa 0.679 1.262 0.0288 68 Central America/Mexico - South America 0.067 0.125 0.0062 69 Central America/Mexico - Oceania 0.445 0.828 0.0196 70 Azores - Mediterranean 0.118 0.219 0.0049 71 Continental Europe, United Kingdom, Ireland - Africa 0.295 0.549 0.0138 72 Continental Europe, United Kingdom, Ireland - Oceania 0.566 1.053 0.0239 73 U.S. Gulf Coast - Africa 0.309 0.575 0.0171 74 Mediterranean - Africa 0.277 0.514 0.0151 75 Africa - Middle East/Persian Gulf/Gulf of Oman 0.384 0.714 0.0202 76 Central America/Mexico Interport 0.096 0.178 0.0060

Exhibit 1- Page 7 of 7

77 U.S. East Coast - Oceania 0.499 0.929 0.0193 78 U.S. Gulf Coast - Oceania 0.434 0.807 0.0230 79 Hawaii - Oceania 0.275 0.512 0.0105 80 Oceania - Middle East, South Asia, Indian Ocean 0.422 0.785 0.0216 81 Oceania Interport 0.119 0.221 0.0035 82 Alaska - Far East 0.190 0.353 0.0062 83 Alaska - Oceania 0.304 0.565 0.0096 84 Caribbean - Central America, Mexico 0.055 0.103 0.0018 85 Hawaii - Middle East, South Asia, Indian Ocean 0.566 1.054 0.0275 86 Mediterranean - Scandinavia, Baltic 0.177 0.329 0.0082 87 Far East - Scandinavia 0.414 0.770 0.0204 88 Continental Europe, United Kingdom, Ireland - Caribbean 0.165 0.308 0.0066 89 Mediterannean - Oceania 0.370 0.687 0.0160 90 Far East - Africa 0.396 0.736 0.0129 91 Alaska - Middle East, South Asia, Indian Ocean 0.429 0.798 0.0133 92 Caribbean - Middle East 0.337 0.626 0.0161 93 Far East - Central America/Mexico 0.334 0.621 0.0136